Management views about desired capital: The case of UK banks and building societies

Abstract

This paper presents the findings of a survey of UK banks and building societies undertaken to understand management’s reasons behind their decisions about capital. The survey shows that: (a) firms use different approaches to form their views about “desired” capital; (b) the main factors explaining the level of a firm’s desired capital are financing the firm’s long‐term business strategy and FSA’s capital requirements; (c) actual capital usually exceeds firms’ desired capital; (d) a change in a firm’s individual capital requirements is likely to lead to a change in its desired capital in the medium term. The paper reflects the authors’ views and not the corporate views of the FSA.

Citation

Alfon, I., Argimon, I. and Bascuñana‐Ambros, P. (2004), "Management views about desired capital: The case of UK banks and building societies", Journal of Financial Regulation and Compliance, Vol. 12 No. 3, pp. 263-274. https://doi.org/10.1108/13581980410810830